Hacker News Reader

Comment by Aurornis | Hacker News Reader

> If you'd told me 15 years ago that people would be running freely-distributed software originating from research labs in China on computers self-hosted in their own house as an alternative to authoritarian overreach and control by the US in internet-based services, I'd have told you that you were smoking some good reefer.

It’s a lot less surprising when you understand the tactic of economic dumping, which China has used for years to attack industry front-runners: https://en.wikipedia.org/wiki/Dumping_(pricing_policy)

They’re not giving away the models because they love freedom and want to generously offer gifts to the world. They’re doing it as a way to undermine the industry leaders and attract people to their brands.

View on HN

> They’re doing it as a way to undermine the industry leaders and attract people to their brands.

I'm not seeing a problem here; don't all companies have this goal?

It is bad when it's done by nations outside of the West

When West does same, it is capitalism for the prosperity of everyone, healthy competition

Selling a product below its cost of production can be done as a loss leader or market share tactic, but eventually you need to sell things for at least what it costs to make them.

Economic dumping is a specific scenario where one country tries to flood another country with cheap products in a way that usually has some government involvement subsidizing or incentivizing it. Countries are careful to hide these incentives or subsidies when possible because it's an invitation to trade wars. For China specifically, the state takes ownership positions in companies and has no problem forcing companies in the direction they want.

isn't blitzscaling essentially the same thing, except for when American companies do it (not always within their own country, e.g. spotify, netflix, or amazon)

", but eventually you need to sell things for at least what it costs to make them."

Gmail, and every other free service would like a word. Net tangential profit invalidates your point. They can loss lead LLM's forever if they are getting other economic benefit from the practice

The problem isn't the goal, it's using vast money reserves to sell at a loss and hamper competition.

Somebody tell the Chinese companies to stop dumping AI, so US labs can keep burning pension funds money wrapped in VC checks fine dumping AI at a huge loss.

In any case I find the dumping argument stupid: they are giving both the model weights away and publishing in the open their results and how they got there.

I was just saying the general issue. This situation is much more complicated.

Isn't that just called a startup? It's not like openAI makes a profit.

Losing money as a company is fine. Losing money on each sale is often anti-competitive.

> They’re doing it as a way to undermine the industry leaders and attract people to their brands.

Isn't that just how competition works? Codex and Claude are both widely speculated to be sold at a loss (at least compared to API pricing), so why isn't their tactic also considered dumping? OpenAI and Anthropic aren't stealing IP and subsidizing model inference because they love freedom either. They're doing it to undermine industry competitors and attract people to their brands.

The US government deliberately chased a strategy of denying China access to powerful Nvidia hardware. Shipping efficient and cheap LLMs is their only option, just like Jensen Huang warned would happen. And now that China's smaller models are reaching the frontier, everyone cries foul.

It is probably a naive point of view that I hold (I haven't thought it through properly) but the western capitalist version is that investors providing money to do dumping of prices is ok (as long as you are not considered a monopoly) and the Chinese state sponsored capitalism is considered dumping as it goes against the agreed WTO rules for how international trade is supposed to work. The western capitalist governments (probably with a lot of lobbying support) wrote the WTO rules. Not trying to defend either way, but it seems to be different economic and political systems trying to gain dominance over each other.

That side of it is understandable, albeit open to interpretation. I can see how both sides justify their own choices in the short term.

But we hear this "dumping" argument quite often for seemingly arbitrary purposes. Is it "dumping" to sell cheap STM-32 clones when Arm LTD. won't let you buy a license? Is it "dumping" to sell $20,000 EVs to a nation that can barely build $30,000 EVs with federal and state subsidies? In many respects, China's cheap stuff is just better-suited to the global economy than America's high-margin products. If both countries are leveraging federal protectionism to promote and develop their products, it doesn't feel like State Owned Enterprises are on unfair footing compared to SpaceX or OpenAI.

> Codex and Claude are both widely speculated to be sold at a loss (at least compared to API pricing)

It's more likely that the API prices are highly profitable. I could see the subscription plans losing them money for some power users who actually use 100% every week, but given my past experience with subscription products I would estimate that their average utilization is far, far lower than in those comparisons where people take the tokens produced by exhausting the plan 100% and then compare to hypothetical API pricing.

As for economic dumping: The crucial difference is that there's usually some geopolitical influence happening, like government subsidies, incentives, or the government simply owning the companies directly and weaponizing their output even if the company runs at a loss.

Reply on news.ycombinator.com